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March 18, 2013

Has Einhorn Won Apple Fight?

Bloomberg analyst survey finds most predict huge dividend hike

It’s a relevant question now that it’s increasingly likely that Apple will raise its dividend. The tech giant has been under increasing pressure to dole out more of its $137 billion hoard from activist shareholders like Einhorn, president of Greenlight Capital. The hedge fund manager filed a lawsuit at the beginning of February to get CEO Tim Cook and his team to do just that.

Apple will probably lift its quarterly dividend 56% to $4.14 a share, for an annual payout of $15.7 billion, according to a survey of analysts by Bloomberg. The resulting yield of 3.7% would be higher than 86% of the companies in the Standard & Poor’s 500 Index paying dividends.

As the news service notes, Cook, who a year ago this month reinstated a dividend and announced a $10 billion buyback, faces mounting pressure to take bolder steps to pay out more of Apple’s cash and investments. Many companies announce dividend changes once a year, Bloomberg adds, fueling speculation about Cook’s plans as Apple approaches the anniversary of last year’s announcement, which came on March 19. The CEO reinstated dividends after a 17-year hiatus, breaking with a pattern set by co-founder Steve Jobs, who sought to preserve capital.

Cook called the shareholder lawsuit against the company a "silly sideshow" at the time of its filing, even as he said he was open to looking at the shareholder's proposals for sharing more cash with investors.

Einhorn’s suit said a proposal slated for a vote at the company's annual meeting in February would make it more difficult to enact his plan to reward shareholders by distributing a new class of shares.

Calling the fight a waste of time, Cook said Apple wouldn’t waste money by mailing shareholders to persuade them to vote for the proposal.

"My preference is that everyone on both sides of this issue would take the money they're spending on this and donating it to a worthy cause," Cook said.

Repeating previous statements, Cook also said that the company is "seriously" looking at ways to hand out more cash to shareholders.